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MMO Week: SOE president John Smedley

The latest on the company's PS3 titles, the learning experiences of Vanguard, and why listening to customers is the top priority

Continuing MMO Week on is a wide-ranging and in-depth interview with one of the most influential figures in the genre, worldwide - as president of Sony Online Entertainment, John Smedley is responsible for a large number of key MMO titles, including the Everquest games and Star Wars: Galaxies.

The company's experienced mixed fortunes with some of its titles more recently, but with titles in development such as The Agency for the PlayStation 3 and another title in development for the Indian market based on the Ramayan 3392 AD comic, there's a lot more yet to come. How is work coming along on the PS3 titles?
John Smedley

Work's coming along great - we've been very careful to keep our games playable as much as possible all the time. We're using the Unreal 3 engine for DC and Agency, and because of that we're a long way along on those titles. How would you characterise the change that has undergone SOE in the past few years, in terms of working with partners?
John Smedley

One thing that's happened quite often is that we've been able to work with some great partners. We've worked with the LucasArts guys for years, and right now we're working with the Warner Bros team on DC Universe, so for us partnerships are what it's all about.

And we also launched the Pirates of the Burning Sea game with Flying Labs, so we're always out there looking for people to work with. How do you approach those partnerships? What level of involvement do you have in development, or marketing? What's your ideal partnership?
John Smedley

The ideal relationship is that we look at everything from the game first - like with Pirates of the Burning Sea, a high quality game, a very good developer. We work with people we like and want to work with, that's important too. There's just not enough hours in the day.

We all love what we do, so we want to work with people we care about, and on games that we want to play. How do you think the market has changed over time?
John Smedley

It's been interesting to watch, because a couple of high profile titles haven't succeeded particularly well, and I think that since World of Warcraft launched and raised the bar in such a big way, people - especially in the money area - are focusing on this in a big way.

So the market is expanding very rapidly, but it's going in directions that people didn't expect, like for example, the rise of games for kids is huge. Luckily we anticipated that a few years ago when we put Free Realms into development.

You have to time these waves, and put a lot of investment into these games, plan ahead - and luckily that's paid off for us. There's definitely a skill to predicting what's going to be popular such a long time in advance, and get work underway, it seems.
John Smedley

It is, and I just saw this quote, I think it was from Henry Ford, that Steve Jobs also used: "If I'd asked my customers what they would have wanted, they'd have said 'A faster horse.'"

You have to think a few steps ahead, and I think one of the things that World of Warcraft did really well was take a game like Everquest, which really pioneered the space, and they really polished it up.

Now it's time for us to lead in new directions, and work on games in different genres. With The Agency we're working on the spy genre, with the DC Comics we're working on the heroes genre, we're making sure that we're thinking ahead of where the market it. With your existing portfolio, as the market has changed customer expectations have also changed. How have design priorities evolved over time?
John Smedley

One thing that I've seen is that the user interface can't be the old, clunky thing for PC gaming nerds that it always has been, and we're learning that as an industry - we're reaching a broader audience as a result. And that lesson's not lost on us, we're very focused on making sure we have an accessible user interface.

We're making sure that our games run on a wider specification of machines, because that's another problem - we've been making games for machines that we all have at home...well - that doesn't help us get the 10 year old kid with the 4 year old computer. Are there lessons you can learn from seeing the success of the Wii, with the level of accessibility that brings?
John Smedley

Well, look at Rock Band, look at the success of Guitar Hero. It is proving that if you make the right game, you will reach the right audience, and reach a broader audience.

And that's a turn that I'm really pleased to see. Guitar Hero was the first game that my wife was really excited about - and she doesn't like games. That proved something to me. My young kids play Webkinz, they're 6 and 8 - to me that just shows me that we can reach a much wider variety of people. Looking back, SOE has been a big cog in the MMO market over time - how important has the portfolio plan been to you?
John Smedley

Yeah, that was something that we focused on pretty early, and we've had pretty much a success in it. We tried some things - we were the first people out there with an MMOFPS - and with that we're going to do it again, we've just got to learn the lessons.

We're on generation two, whereas everybody else is on generation one - and I think that will give us a leg-up in our future titles. What have you learned about the community aspect - Star Wars: Galaxies, for example, went through a difficult transition period.
John Smedley

The lessons we've learned from our community have just been extraordinary. For years now we've been running something called the Influencer Summit, where we pull 100 people, and 50 of those people will be our worst critics.

So one of the things we're trying to do is listen better as a company, and over the past few years I think we've done that - I'm really proud of the strides we've taken in that direction. Listening is a very important skill. Why do you think there was that response?
John Smedley

Because we didn't listen. I think we were a little too arrogant as a company. We thought we knew what was best as a company, and we should have listened more. That's really the biggest lesson we've learned as a company in the last eight years. Listening to our customers is everything. Does that influence strategy as far as beta-tests go, when you're looking to get feedback around the games?
John Smedley

It does, because we now have a much better mechanism in place for listening to customer feedback. Our entire company is very quality-oriented now, and extremely focused around making sure that we're giving the users, who are paying the bills, something that they want, and that's fun. Is there an optimum length for a beta test - economic imperatives come into it at some point, so when do you think "Yeah, we need to launch this now"?
John Smedley

There's not one optimum length. Something we've learned as a company is that people's expectations of a beta are a lot different then they used to be. In the old days a beta test used to be about finding bugs, and making sure that things are up.

Not any more. Now, when you're out there in a beta, you've got to have pretty much a finished product, so the only things you're doing is fixing bugs and polishing. But even the bugs better be low, otherwise people aren't going to give you a second look.

So we're a lot more careful now about what we put in front of beta-testers. We make sure it's further along, and more polished. That's pretty unfair really, isn't it? People are less patient.
John Smedley

Yeah, I think that's part of the listening that we've had to do. We would find ourselves frustrated because we were thinking that not enough people were sending us in bugs. And that's because, well - there just better not be any there in the first place.

When a customer says they want into the beta test, what they really want is early access to your game. It's a tough thing that we have to make sure we focus on. We saw Vanguard go through a tough launch period last year - how do you feel the game has developed since then?
John Smedley

Actually Vanguard has been doing quite well, and since the team has been moved down here to our San Diego office, we've been rocking and rolling on it, we're real pleased with it.

It was a bit of a rocky road at first, but we've sold a few hundred thousand units of the game, and it's doing quite well. Looking back, would you have changed the launch?
John Smedley

Well, the problem was that it wasn't our game when it launched, we didn't buy it until after, so we just weren't in a position to do anything about that unfortunately.

It was a company that was being run into the ground, and we needed to come in and take care of it. Does that provide learning experiences as well, things to take into partnerships, maybe advice to give to developers?
John Smedley

Here's the problem - it all depends on the deal, and every deal is different. For example, Perpetual with Gods and Heroes - behind the scenes in that they were putting on a brave face to customers, but we were giving them advice all the time - which was ignored.

At some point you get to this point in fact with Perpetual that was a direct result of the learnings we got from Vanguard - at one point they wanted to try and put the thing out early, and we said "Look, we're not interested - we don't care if we lose money, but if you put this thing out there, users are going to hate it, and it's going to be a bad release." It's a pretty brave decision to have to take?
John Smedley

I wouldn't call it brave, you just have to learn those lessons from things like Vanguard. I would say that the circumstances sometimes dictate things, and as a company we are less and less willing to do anything that might harm our reputation, and we want to make sure that our games are super-high quality. Looking ahead, how do you see the market growing? Do you see competition from things like social networks?
John Smedley

I think what's happening is that social networking has infiltrated every aspect of the internet, and the same is true of games. I think you're going to see a lot more social networking aspects to games, but are they competing? I don't think they are.

Something like Facebook is entertaining, but it's not the same entertainment that we offer. I do see more usage of them though, that's for sure. Are you expecting a big expansion of the market? Maybe 20-25 million playing MMOs in the West?
John Smedley

Yes, I am, I believe you're going to see that kind of explosive growth. With the advent of consoles, which is a big bet that we've made on our future, when you're talking about the amount of online console users growing at such a high rate, I absolutely think it's going to grow in a big, big way. Then on a worldwide basis, we're very aggressive about supporting Europe and Asia. How do you manage the rising costs of development - it's getting pretty tough?
John Smedley

You manage it by looking very strategically at where your costs are. For example, we've invested in one of our divisions out in Taiwan where the costs are lower, so we can do art cheaper than we can here. We're very conscious of using our outsourcing dollars for art, so we can keep our budgets down.

And we're very focused on the return on our investment, looking to take our products to as wide a variety of countries as possible, so we're going to develop in places like India, for example, with the Ramayan license.

We're very focused on those emerging markets where the cost will be low to build in the first place, so the return on investment will be disproportionately high, and that's the only way you can really do it.

That, and get a lot of users... With things like Ramayan, looking at the portfolio, and bearing in mind things like Vanguard, Everquest 2, you're adding some interesting, very different properties.
John Smedley

We are, and if you look at Ramayan, that is a bet on the future. I think one of the few success stories in the past twenty years is Blizzard in Korea. I think they own the Western version of the Korean market in such a huge way because they got Starcraft in there early.

We want to do something similar in India, because we see India as the next China. We think that in five years, India will be as big as China in terms of internet usage.

So we're placing those bets. We placed a bet in Taiwan - and we're doing local language production, with local talent, in places that other Western companies just don't have a presence - so we're really trying to take a good look at the portfolio of games that we have. What's your view on the business model argument?
John Smedley

We're a big believer in micro-transactions, we certainly think they are part of the future, and that's why we invested in the collectible card business, because we wanted to be in micro-transactions early in the US, and it's been very successful.

I think it's a way to earn money that doesn't piss customers off, because if it gives them the opportunity to play something for free, and then they can just pay small amounts for clothing or whatever, I think that could really expand our space in a big way. Is it about more choice?
John Smedley

That's exactly it, and when you give people more choice, lots of times they'll give you more money than you thought they would. But then on the reverse side, they get the benefit of not having to pay if they don't want to.

For me that's kind of the ultimate, that try-before-you-buy kind of thing, it's going to be a powerful way to get people into these games. Where do you see SOE in 3 years - will your biggest profile titles things like Ramayan, or will they still be the more traditional Western titles?
John Smedley

We'll have to wait and see. Some of these things, you make the investment, and you hope it's going to sprout and grow into something real, but you have to wait and see.

I think we've got a good mix across the board, with Asia, India, here in the Western market, consoles - so I think we're pretty well covered.

John Smedley is the president of Sony Online Entertainment. Interview by Phil Elliott.

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